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This article initially appeared in the December 2014 issue of “Baltic Rim Economies” published by Pan-European Institute.

In 2010 the Russian government launched the Moscow International Financial Centre (MIFC) project and sought international assistance, including from TheCityUK (the self-described “representative voice of Financial Services in the UK”). A Memorandum of Understanding between the MIFC Taskforce, TheCityUK and Vnesheconombank was signed in Moscow in 2011 in the presence of President Dmitri Medvedev and Prime Minister David Cameron.

Subsequently a number of reports were produced, mainly by TheCityUK and the IBRD.

Right from the beginning there were fundamental delusions. An early 2011 survey of “260 participants from leading Russian and foreign entities active in the Russian financial market” reported such views as Moscow as a “regional financial centre for CIS”, and “Moscow is where East meets West. It is a blend of different cultures and nationalities. It will be easy for everyone to come to do business”.

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In the first week of November I conducted an emailed survey of Russian (mainly Moscow) “educated middle class” attitudes to (mainly) financial issues in Russia and attitudes to Russia’s financial relations with China, the US, Europe, and the UK. Most of the over 1,000 people to whom I sent the survey were my LinkedIn “connections”. (I cast the net quite wide even though I suspected that many of my “connections” would have little interest in such financial matters.)

I wanted to get “financial expert” Russian feedback so, for the purposes of this article, I subsequently pruned the data to remove all non-Russian respondents and also remove any who did not indicate that “about 50% or more” of their work time involved “thinking about financial issues”.

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Nearly 20 years ago, after my second visit to Russia as Chief Economist of HSBC (Australia) I wrote about the reform plans then contemplated:

“there is too little emphasis on the need for rapid and vital reforms in the accounting, banking and legal spheres, including anti-monopoly legislation. It is almost as if this very important component of an effective market economic system will rise by itself”. (See left hand-side of page for full 1992 article.)

For two decades Russian economic policy makers have too often sought big game-changing moves – and then made a mess of the details to the great disadvantage of ordinary citizens. The various “privatizations” of the 1990s are the most obvious manifestation of this. We have yet to see how what the results will be for the new round of privatizations, Sochi 2014, the APEC Summit, or Skolkovo.

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At the recent St. Petersburg Economic Forum, President Medvedev suggested that the proposed “International Financial Center” might be housed outside Moscow – or, at least outside the present boundaries of Moscow because there is also a proposal to expand the city limits.

According to one report, “Medvedev ordered Russian authorities to consider taking the prospective International Financial Center out of Moscow. The initiative comes from the head of the Russian Sberbank, German Gref, who said that the measure would solve a number of infrastructural issues in the Russian capital.”